Why Ripple May Still End Up on Coinbase

Ripple, currently the third-largest digital currency in the world after bitcoin and ethereum, had an extraordinary end to 2017. In the last few days of the year, the price of XRP climbed dramatically. In the process, and with tokens trading for more than $3 each, ripple catapulted past ethereum to become the second-largest cryptocurrency by market cap. (See also: Ripple Briefly Was 2nd Most Valuable Cryptocurrency.)

Although it has since fallen by a significant margin, in the first days of 2018, ripple had generated a great deal of excitement. (See also: Bitcoin Price Slides Further; Ripple Builds Lead Over Ethereum.) Perhaps that is why many investors found it odd when Coinbase announced in early January that it would not be adding any new coins to its service, including ripple. As time goes on, though, some investors believe there is still a chance ripple could eventually end up on one of the most popular digital currency exchanges.

Is Ripple Not Being Added Ever, Or Just Not Now?

When Coinbase announced that it would not be adding any new digital currencies, ripple's price fell by about one-third in immediate response. Still, though, the announcement must be considered carefully.

Was Coinbase indicating that ripple would never be added to its platform, or was it merely suggesting that XRP tokens would not be available for trade in the near future?

Coinbase, like many cryptocurrency exchanges and even like many digital currencies themselves, has been overwhelmed by new interest in digital currencies, particularly in the last few months.

In mid-December, Coinbase indicated a need for expanding its office space by more than six times in order to keep up with increased demand, according to Hacker Noon. Perhaps the lack of infrastructure helped to explain why Coinbase added bitcoin cash to its limited offerings; the addition would help with liquidity and serve to pull back bitcoin's early bull run.

Bitcoin Cash As a Model

It's useful to spend a bit more time looking at bitcoin cash to get a sense of how ripple might eventually come to Coinbase. Coinbase would not wish to alert investors of its plans to add bitcoin cash to the platform, as investors would then buy up as much cheap bitcoin cash as they could before the launch, in the hopes that it would gain upon being added to Coinbase.

Coinbase also has to deal with the fact that, for the time being, it is one of the most popular exchanges for U.S. customers. When ripple was rallying into the new year, Coinbase faced a cash flow shortage as users rushed to get rid of their bitcoin, litecoin, and ethereum holdings in order to buy up XRP. The cash flow problem, exacerbated by issues with transaction completion, does not reflect well on Coinbase from a publicity standpoint. If there's a way that they can better control these issues when they roll out ripple trading, it's a safe bet they will.

Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns bitcoin. It is unclear whether he owns other bitcoin forks.

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